What is the POC in a volume profile?

The price where the most volume traded. POC means point of control, the thickest row of the profile. The market traded most there, so price often returns to it.

Price reached a thin spot in the profile (LVN). What to expect?

A fast move through to the next thick zone. Where volume is thin, the market has nothing to hold on to. Price usually rushes through to the next high-volume zone.

Price has been above VWAP all day and pulled back to it. How is that usually read?

As a possible buy spot with the day’s trend. Above VWAP buyers are stronger intraday, and a pullback to the day’s average often gets bought. The stop goes below VWAP with a buffer.

Volume profile and VWAP

Lesson 9 of 23 in the course “Technical Analysis”. Free, with animations and a quiz.

Volume by price

Normal volume shows how much traded at each moment. The volume profile flips it: how much traded at each price. The POC (point of control) is the price with the biggest volume. The zone where about 70% of volume traded is the value area; its edges are VAH and VAL. In TradingView it’s the Volume Profile indicator.

Where price slows down and where it flies

Thick spots in the profile (HVN) are prices the market long considered fair. Price slows down there, and they act as levels. Thin spots (LVN) price once rushed through, and if it returns there it’ll likely fly through again. So it’s handy to hide the stop behind a thick zone and put the target at the next thick one.

VWAP

VWAP is the average price of all trades in the day, where each trade weighs as much as its volume. Big funds benchmark their buying against it: buying below VWAP means buying cheaper than average. While price is above VWAP, buyers are stronger intraday. In a trend, pullbacks to this line often get bought. VWAP resets every new session.

OBV: volume added up into a line

The OBV indicator was created by Joe Granville in 1963. The logic is simple: on a green day add all the volume, on a red day subtract it. What matters isn’t the OBV level itself but its direction. If price made a new high and OBV didn’t, buyers are weakening. If OBV rises while price stands still, someone is quietly building a position.

Check yourself

What is the POC in a volume profile?
Correct answer: The price where the most volume traded. POC means point of control, the thickest row of the profile. The market traded most there, so price often returns to it.
Price reached a thin spot in the profile (LVN). What to expect?
Correct answer: A fast move through to the next thick zone. Where volume is thin, the market has nothing to hold on to. Price usually rushes through to the next high-volume zone.
Price has been above VWAP all day and pulled back to it. How is that usually read?
Correct answer: As a possible buy spot with the day’s trend. Above VWAP buyers are stronger intraday, and a pullback to the day’s average often gets bought. The stop goes below VWAP with a buffer.

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